Toronto investors scramble for rental property
December 11, 2017
|Michael Betsalel, senior vice-president, JLL Capital Market: “voracious demand”.|
The low vacancy rate and higher rents being seen in Toronto has real estate investors scrambling to buy—and renovate—older rental apartment buildings, according to a multi-family report by Jones Lang LaSalle (JLL) Canada.
“Toronto multi-family market is witnessing a voracious demand from investors across the spectrum,” said Michael Betsalel, senior vice-president, multi-family, JLL Capital Markets.
In Ontario, worries over new rent-control legislation have cooled many developers’ interest in building new rental units, despite rising demand, he noted.
“We think that rent controls will further reduce supply and drive vacancy rates even lower,” Bestalel said.
Toronto’s rental vacancy rate is now 1.3 per cent and average rent, at $1,400, is the second-highest in the country.
Toronto has witnessed a massive increase in the price per suite of rental buildings in the past year. Yet, at nearly $200,000, the price is still below replacement cost, JLL noted. Many investors are expected to buy older apartment buildings and renovate them to improve rental income on turnovers. JLL said rental investors are willing to accept the current low capitalization rates on apartment buildings in anticipating of rising rents and property appreciation. “I expect the multi-family sector to continue to strengthen in 2018,” Betsalel said.